HAMILTON, NJ --(Marketwired - July 29, 2014) - First Bank (
Second quarter results included $256,000 in merger related expenses and $34,000 in gains on sale of investment securities. Book value per share was $6.68 at the end of the second quarter, an increase of $0.14 compared to book value of $6.54 at the end of the first quarter.
President and Chief Executive Officer Patrick L. Ryan discussed the results: "We had a good second quarter. Overall financial results continue to be impacted by merger-related items, but the core banking platform performed well. As those merger-related costs taper off, we expect the second half of 2014 should give some good visibility into the true, improved earnings profile of the franchise. While growth slowed somewhat in the quarter, we expect deposit and loan growth will return to levels in line with historical performance. Loan growth was impacted by anticipated attrition in the Morris County market. With the deal closed and successful systems integration behind us, we expect our Morris team will become a growth engine. Furthermore, the loan pipeline remains strong throughout all of our markets.
"On the deposit side, we managed growth by lowering rates as we worked through excess liquidity generated through the Heritage acquisition and the sale of certain investment securities. The securities sale generated a small gain, but our primary focus was protecting book value in a rising rate environment by selling certain securities with greater projected market value risk. We think we effectively achieved that objective. Once excess liquidity is deployed, deposit growth efforts will be reenergized."
Ryan continued, "Importantly, we are starting to see some cost savings generated from the merger. Improved operating leverage will be a key to better financial performance. Actions taken with deposit rates also contributed to an improved net interest margin of 3.81% in the second quarter compared to 3.61% in the first quarter. Nevertheless, we expect continued margin pressure as loan pricing remains very competitive. With continued improvement in asset quality trends, together with new growth coming from our Bucks County, PA and Morris County teams, we are looking forward to a good second half of 2014."
Second Quarter 2014 Highlights
- Balance Sheet
- Total assets at June 30, 2014 were $610.6 million, an increase of $11.4 million or 1.9% compared to March 31, 2014, and an increase of $230.2 million or 60.5% compared to June 30, 2013.
- Total loans reached $466.9 million at June 30, 2014, an increase of $16.5 million or 3.7% compared to March 31, 2014 and an increase of $175.2 million or 60.0% compared to June 30, 2013.
- Total deposits reached $532.1 million at June 30, 2014, an increase of $10.0 million or 1.9% compared to March 31, 2014 and an increase of $193.9 million or 57.3% compared to June 30, 2013. Non-interest bearing deposits increased to 15.6% of total deposits at June 30, 2014.
- Book equity increased to $62.8 million at June 30, 2014.
- Book value per share was $6.68 at June 30, 2014 compared to $6.54 per share at March 31, 2014 and $6.61 per share at June 30, 2013. Tangible book value per share was $6.64 at June 30, 2014, compared to $6.50 per share at March 31, 2014 and $6.61 per share at June 30, 2013.
- Income Statement
- Net interest income for the second quarter of 2014 totaled $5.4 million, an increase of $1.2 million or 28.3% compared to $4.2 million for the first quarter of 2014, and an increase of $2.3 million or 71.7% compared to the second quarter of 2013.
- Non-interest income for the second quarter of 2014 totaled $317 thousand, an increase of $184 thousand or 138.3% compared to $133 thousand (excluding the bargain purchase gain) for the first quarter of 2014. When compared to the second quarter of 2013, non-interest income increased $99 thousand or 45.4%.
- Non-interest expense for the second quarter of 2014 totaled $4.1 million, an increase of $899 thousand or 27.9% compared to $3.2 million for the first quarter of 2014, and an increase of $1.8 million or 74.8% compared to $2.4 million in the second quarter of 2013.
- Pre-tax income for the second quarter of 2014 totaled $1.3 million, an increase of $320 thousand or 33.5% compared to $956 thousand (excluding the bargain purchase gain) for the first quarter of 2014, and an increase of $442 thousand or 53.0% compared to the second quarter of 2013. When adding back the $256 thousand in merger-related costs and subtracting $34 thousand in gains on sale of investment securities, pre-tax income was $1.5 million for the second quarter of 2014. This compares to adjusted pre-tax income of $1.2 million in the first quarter of 2014 when excluding the bargain purchase gain and adding back in merger-related and other non-recurring expenses.
- The provision for loan losses in the second quarter of 2014 totaled $336 thousand, an increase of $158 thousand or 88.8% compared to $178 thousand for the first quarter of 2014.
- Other items
- The tax equivalent net interest margin (NIM) for the second quarter of 2014 was 3.81% compared to 3.61% for the first quarter of 2014 and 3.53% for the second quarter of 2013.
- Non-performing assets (NPAs) were $5.7 million or 0.94% of total assets at June 30, 2014 compared to $5.5 million or 0.91% of total assets at March 31, 2014.
- Non-accrual loans totaled $3.3 million or 0.71% of total loans at June 30, 2014 compared to non-accrual loans of $3.1 million or 0.69% of total loans at March 31, 2014.
- Loans 30-89 days past due totaled $7.8 million at June 30, 2014 compared to $8.8 million at March 31, 2014. We had 1 loan over 90 days past due and still accruing at June 30, 2014 totaling $88 thousand.
- OREO (including other repossessed assets) totaled $2.3 million at June 30, 2014.
- Note: non-performing, non-accrual, and past due loan data does not include $2.9 million of loans acquired with deteriorated credit quality that were marked to fair value as part of the HCB acquisition at June 30, 2014. In the first quarter earnings release dated May 15, 2014, loans totaling $3.0 million acquired with deteriorated credit quality were included in the non-performing, non-accrual, and past due loan numbers.
- Regulatory capital ratios at June 30, 2014:
- Tier 1 Leverage ratio of 10.17%.
- Tier 1 Risk-Based capital ratio of 12.05%.
- Total Risk-Based capital ratio of 13.04%.
- The allowance for loan losses (ALLL) to total loans at June 30, 2014 was 1.08% compared to 1.05% at March 31, 2014. The increase in the ALLL ratio relates primarily to an increase in our organic portfolio and payoffs/reductions in the portfolio acquired in the Heritage transaction that currently carries no loan loss reserve because of the mark to market adjustment on that portfolio at the time of acquisition.
- 95 full-time equivalent employees (FTEs) at June 30, 2014, compared to 91 FTEs at March 31, 2014.
About First Bank First Bank ( www.firstbanknj.com ) is a New Jersey state-chartered bank with eight full-service branches in Denville, Ewing, Hamilton, Lawrence, Randolph (2), Somerset and Williamstown, New Jersey. With $611 million in assets as of June 30, 2014, First Bank offers a traditional range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia, PA corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol "FRBA".
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10K under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors.
| FIRST BANK AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||
| (in thousands, except share data) | ||||||||||
| (Unaudited) | ||||||||||
| June 30, | December 31, | |||||||||
| 2014 | 2013 | |||||||||
| Assets | ||||||||||
| Cash and due from banks | $ | 10,709 | $ | 9,787 | ||||||
| Interest bearing deposits with banks | 34,901 | 13,927 | ||||||||
| Cash and cash equivalents | 45,610 | 23,714 | ||||||||
| Interest bearing time deposits with banks | 5,182 | 4,903 | ||||||||
| Investment securities available for sale | 36,599 | 65,017 | ||||||||
| Investment securities held to maturity (fair value of $30,003 at June 30, 2014 and $15,353 at December 31, 2013) | 29,835 | 15,414 | ||||||||
| Restricted investment in bank stocks | 1,496 | 1,131 | ||||||||
| Other investments | 5,000 | 5,000 | ||||||||
| Loans, net of deferred fees and costs | 466,878 | 339,975 | ||||||||
| Less: Allowance for loan losses | 5,024 | 4,675 | ||||||||
| Net loans | 461,854 | 335,300 | ||||||||
| Premises and equipment, net | 3,330 | 1,787 | ||||||||
| Other real estate owned, net | 2,335 | 1,664 | ||||||||
| Accrued interest receivable | 1,497 | 1,232 | ||||||||
| Bank-owned life insurance | 8,933 | 8,805 | ||||||||
| Intangible assets, net | 394 | - | ||||||||
| Deferred income taxes | 7,187 | 2,352 | ||||||||
| Other assets | 1,393 | 473 | ||||||||
| Total assets | $ | 610,645 | $ | 466,792 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Deposits: | ||||||||||
| Non-interest bearing | $ | 82,901 | $ | 48,186 | ||||||
| Interest bearing | 449,246 | 350,927 | ||||||||
| Total deposits | 532,147 | 399,113 | ||||||||
| Long-term borrowings | 14,000 | 14,000 | ||||||||
| Accrued interest payable | 349 | 156 | ||||||||
| Other liabilities | 1,302 | 1,016 | ||||||||
| Total liabilities | 547,798 | 414,285 | ||||||||
| Stockholders' Equity: | ||||||||||
| Preferred stock, par value $2 per share; authorized 5,000,000 shares; no shares issued and outstanding | - | - | ||||||||
| Common stock, par value $5 per share; authorized 20,000,000 shares; issued and outstanding 9,408,491 shares at June 30, 2014 and 8,520,299 shares at December 31, 2013 | 47,042 | 42,602 | ||||||||
| Additional paid-in capital | 14,229 | 13,052 | ||||||||
| Retained earnings (accumulated deficit) | 1,872 | (2,290 | ) | |||||||
| Accumulated other comprehensive loss | (296 | ) | (857 | ) | ||||||
| Total stockholders' equity | 62,847 | 52,507 | ||||||||
| Total liabilities and stockholders' equity | $ | 610,645 | $ | 466,792 | ||||||
| FIRST BANK AND SUBSIDIARIES | |||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
| (in thousands, except for share data) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Interest and Dividend Income | |||||||||||||
| Investment securities - taxable | $ | 338 | $ | 225 | $ | 705 | $ | 425 | |||||
| Investment securities - tax-exempt | 66 | 30 | 130 | 52 | |||||||||
| Federal funds sold | 1 | - | 2 | - | |||||||||
| Interest bearing deposits with banks and other | 59 | 37 | 117 | 78 | |||||||||
| Loans, including fees | 5,938 | 3,670 | 10,600 | 7,188 | |||||||||
| Total interest and dividend income | 6,402 | 3,962 | 11,554 | 7,743 | |||||||||
| Interest Expense | |||||||||||||
| Deposits | 933 | 764 | 1,809 | 1,524 | |||||||||
| Borrowings | 54 | 45 | 108 | 91 | |||||||||
| Total interest expense | 987 | 809 | 1,917 | 1,615 | |||||||||
| Net interest income | 5,415 | 3,153 | 9,637 | 6,128 | |||||||||
| Provision for loan losses | 336 | 180 | 514 | 514 | |||||||||
| Net interest income after provision for loan losses | 5,079 | 2,973 | 9,123 | 5,614 | |||||||||
| Non-Interest Income | |||||||||||||
| Service fees on deposit accounts | 53 | 19 | 80 | 36 | |||||||||
| Loan fees | 8 | 10 | 10 | 22 | |||||||||
| Title insurance fees | 5 | 3 | 5 | 15 | |||||||||
| Income from bank-owned life insurance | 65 | 37 | 128 | 73 | |||||||||
| Gains on sale of investment securities, net | 34 | - | 34 | 18 | |||||||||
| Gains on sale of loans held for sale | - | 134 | 14 | 134 | |||||||||
| Gain on acquisition of Heritage Community Bank | - | - | 2,606 | - | |||||||||
| Gain on recovery of acquired loans | 97 | - | 97 | - | |||||||||
| Other non-interest income | 55 | 15 | 82 | 26 | |||||||||
| Total non-interest income | 317 | 218 | 3,056 | 324 | |||||||||
| Non-Interest Expense | |||||||||||||
| Salaries and employee benefits | 2,048 | 1,219 | 3,565 | 2,331 | |||||||||
| Occupancy and equipment | 494 | 297 | 906 | 599 | |||||||||
| Legal fees | 98 | 79 | 169 | 113 | |||||||||
| Other professional fees | 315 | 82 | 587 | 156 | |||||||||
| Regulatory fees | 138 | 85 | 224 | 167 | |||||||||
| Directors' fees | 75 | 57 | 134 | 117 | |||||||||
| Data processing | 202 | 109 | 347 | 205 | |||||||||
| Marketing and advertising | 97 | 54 | 189 | 104 | |||||||||
| Travel and entertainment | 71 | 35 | 105 | 67 | |||||||||
| Insurance | 41 | 25 | 73 | 61 | |||||||||
| Other real estate owned expense, net | 74 | 122 | 194 | 268 | |||||||||
| Merger-related expenses | 256 | 12 | 463 | 12 | |||||||||
| Other expense | 211 | 181 | 385 | 293 | |||||||||
| Total non-interest expense | 4,120 | 2,357 | 7,341 | 4,493 | |||||||||
| Income Before Income Taxes | 1,276 | 834 | 4,838 | 1,445 | |||||||||
| Income tax expense | 353 | 309 | 677 | 540 | |||||||||
| Net Income | $ | 923 | $ | 525 | $ | 4,161 | $ | 905 | |||||
| Basic earnings per share | $ | 0.10 | $ | 0.11 | $ | 0.46 | $ | 0.19 | |||||
| Diluted earnings per share | $ | 0.10 | $ | 0.11 | $ | 0.45 | $ | 0.19 | |||||
| Basic weighted average common shares outstanding | 9,396,349 | 4,686,965 | 9,076,792 | 4,686,965 | |||||||||
| Diluted weighted average common shares outstanding | 9,467,472 | 4,693,650 | 9,147,783 | 4,708,022 | |||||||||
CONTACT: Patrick L. Ryan President and CEO (609) 643-0168 patrick.ryan@firstbanknj.com
